With a title like The
End of Fundraising,
Jason Saul’s book is
not intended to be a
balanced, nuanced
treatment of the economics
that underpin today’s nonprofit
ecosystem. Rather, it’s a quasi-polemical indictment
of the current modus operandi
among funding sources and nonprofit “supplicants.”
It’s also a much needed, critical
look at the inherent—and very significant—
drawbacks to how nonprofits support their
work. Any nonprofit executive seriously interested
in extricating his organization,
even if only partly, from the current unbalanced
and inefficient system would be well
served to read this textbook-like study and
seek to apply some of its practical advice.

Under the current system, argues Saul, are
donors who, largely motivated by emotion
and the “pleasure associated with giving,”
write checks without any real understanding
of the impact of their
support. “Only 3 percent make donations
based on relative performance,”
he writes, referencing the
May 2010 Money for Good study,
one of the many citations in the
book. Donors—particularly larger
institutions—are not subject to,
nor terribly interested in, any serious
and regular review of their performance.
Without any consistent feedback,
or a process that weeds out those making ineffective grants, the world of philanthropy
enjoys a quasi-protected status. Hard questions
are rarely posed or answered.

On the receiving end, Saul argues, are
nonprofits caught up in the process of
spending 20 percent of their funds on raising
capital, a rate five times higher than in
the private sector. Moreover, because of
pressure from donors, nonprofits are too focused
on traditional accountability.

Nonprofits, he urges, should act quickly
to remove themselves from this unbalanced
world of donors and supplicants and instead
understand and measure the impact of what
they do. They then should find stakeholders
who not only attach economic value to
these impacts, but also have the ability and
desire to pay for them. Nonprofits must
learn, he argues, to succeed in the huge and
fast-growing “social capital market,” which
is approximately 20 times the size of the
$300 billion philanthropic market. Shift
your focus, he urges, from begging for funds
from people and institutions that are donating
on a purely volunteer basis, to engaging
with stakeholders who want to pay for the
socially beneficial impacts you are creating.

Saul’s prescription is immediately followed
by examples that reflect both his agile
thinking and his desire to empower those
willing to try to take advantage of the social
capital market. The amount of money in play,
Saul calculates, is in excess of $6 trillion for
every US nonprofit—including nearly $3 trillion
in socially responsible investment vehicles,
$500 billion in government spending on
education, and $2.5 trillion on health care.

Saul details four steps for
nonprofits to follow. First, he advises
them to get a deep understanding
of the impact they have
and express it in clear terms. Second,
they should identify those
who want and can pay for impact,
pointing to a growing coterie
of corporate partners, social
and impact investors, and service
providers. Third, he instructs
nonprofits to understand their impact on
buyers’ specific needs. And fourth, he counsels
nonprofits to ensure that their value
proposition is clearly defined. (One interesting
example comes from Minnesota, where a
residential correction facility for adolescent
boys is providing job training for the state’s
growing bicycle industry.) With these four
steps accomplished, nonprofits must then
package and sell this “bundle” to the appropriate
impact buyers. Again, Saul’s book lays
out a step-by-step approach to the sales process
and provides numerous examples.

Undoubtedly, The End of Fundraising will
not appeal to all audiences, particularly
those comfortably entrenched in the old donor-supplicant
paradigm. And, given some
of its bluntness and what could be considered
oversimplification, the book is not
above criticism. For example, Saul writes
that the culture of nonprofits “doesn’t value
knowing about impact; people don’t believe
it’s possible, so they don’t even bother.” But
Saul has painted a compelling and troubling
portrait of mainstream philanthropy and an
engaging analysis of the new social market.
Most important, he has provided a comprehensive
and comprehensible road map for
nonprofits that want to take advantage of
the tectonic change in today’s economy,
where social benefits are increasingly understood
to be an inherent part of all economic
activity.

David Simpson is the president of GoldMail Inc., a
communications service for the nonprofit and forprofit
sectors. For two decades, he has volunteered
and served on the board of directors of Aim High, a
San Francisco-based summer program for underserved
middle schoolers.

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